Spirit willing, reforms flesh is still weak

So by clearing the Tenth Plan which also advocates other reforms including labour ones, the Cabinet signalled that the country’s economic reforms were well on target.

But while this decision brought cheer to the reforms brigade within the government, the Cabinet also proposed an additional DA hike of Rs 1,079 crore for bureaucrats. The hike — from 49 to 52 per cent — will benefit all government employees as well as lakhs of pensioners.

At a time when government expenditure is under great strain, and the plan document cleared by the cabinet talks of downsizing the government, today’s decision will play havoc with the already strained finances of state governments.

Indeed, at the chief ministers’ conference in the capital last fortnight, various CMs had asked the central government to take the lead in freezing DA payments to bureaucrats. While no decision was taken on this, the central government’s hike in DA will now lead to a round of similar demands on state governments as well.

Ironically, briefing reporters on the Cabinet decision to clear the Tenth Plan, deputy chairman K.C. Pant said there has to be a consensus among political parties, centre and state governments ‘‘on taking hard economic decisions.’’

Interestingly, while the Cabinet has cleared an ambitious privatisation target of Rs 16,000 crore per year, this year’s privatisation receipts have been a mere Rs 3,500 crore so far (the target for the year is Rs 12,000 crore).

Getting this target is of course going to be a stupendous task since, as this newspaper reported yesterday, the anti-privatisation forces have now turned physical as well.

Officials of the A.V. Birla-owned Hindalco were threatened, their laptop smashed and car-tyres deflated yesterday, when they visited the NALCO plants in Orissa to formally begin their due dilligence process. All this despite the presence of police and CISF forces who were supposed to ensure there was no law and order problem.

And just a few weeks prior to this, officials of the Indian Oil Corporation (IOC) marched to the Centaur Hotel in Mumbai to repossess the petrol pump which had been sold off along with the hotel to the Batra Group — IOC is controlled by the petroleum ministry, and minister Ram Naik’s differences with disinvestment minister Arun Shourie are well known.

The three-volume Tenth Plan document cleared by the Cabinet today has laid down the road-map for far-reaching labour reforms, sweeping tax reforms to increase the tax-to-GDP ratio, and also in cutting non-plan expenditure including subsidies.

The plan document also envisages various reforms such as privatisation and increasing user-charges in different sectors like, for instance, the Department of Posts.